The Cellular Business Model

Business in the 21st century is fast-paced, our tools are the internet, the knowledge worker, internationalisation, globalisation, the PC, the cloud, digital communications, a networked global economy.

So why are our organisational structures and practices based on 200 year-old thinking?

The current hierarchical corporate structures that dominate our economies have been in place for over 200 years and were notably supported and defined by Max Weber during the 1800s. Even though Weber was considered a champion of bureaucracy, he understood and articulated the dangers of bureaucratic organisations as stifling, impersonal, formal, protectionist and a threat to individual freedom, equality and cultural vitality.

In the 21st century, and particularly in the software industry, we need to evolve. Hierarchical enterprise structures were requisite for the 19th century, should probably have evolved in the 20th century, and are certainly out of date in the 21st century. Enterprises today need to focus on creativity, speed to market, data, intellectual capital, technology adoption and agility.

When you consider the abundance of waste within large organisations – the bureaucracy, governance procedures, multi-layered management hierarchies, complexity, politicking, and size, it is abundantly clear why innovation is impeded. Organisations become slow to market, narrow in perspective, and are reduced to becoming dinosaurs awaiting oblivion… or merger, acquisition, management buy-out, government bail-out etc.

A more suitable model for organisations in the 21st century is cellular in structure.

The entire organisation is a cluster, swarm, honeycomb of individual, autonomous teams of 6-10 members, with each team functioning as an independent profit centre. Companies achieving this cellular model would have the flexibility, adaptability, speed to market and open-minded perspectives required to function on a large scale in rapidly innovating markets.

Through the adoption of Agile & Lean Thinking, Open Book Management, Pattern Theory and Cloud Computing, we can see how an enterprise could exist as a swarm of multiple, independent, autonomous, profit-making entities.

Using Open Book Management, we provide each cell with a clear and unequivocal financial view of the cell, its costs and its expected returns. Principles and practices such as producing shippable product every iteration and the focus on product quality found within agile development, support rapid delivery cycles and speed to market.

We amplify the learning through the use of pattern language for software and organisational structures. The technology infrastructure for a cell to develop and distribute its software products on a global scale without significant capital expenditure, is afforded by the use of cloud computing. As the customer base grows, the ability to serve a wider audience increases on a transactional basis and with cloud technologies this enables a cell to respond effortlessly to elasticity of demand.

The business world is changing at a phenomenal rate, and yet our organisational structures and cultures are not responding or adapting quickly enough. Corporate strategy is no longer purely about research, analysis and long-term planning and investment, it is about making the business more able to cope with change. Our current “in-built” culture and mind-set of hierarchy and centralised command and control is no longer fit for purpose. Market share will be eaten away until more innovative thinking is applied to corporate structures, governance and operating models.

The Cellular Business Model achieves the level of adaptability and flexibility required to react to and exploit market opportunities in the 21st century.